For the past 15 years OTC Markets Group has focused on building a disclosure-based market that provides a simple, effective way for global issuers to access the US market and US investors. This focus has resonated with issuers and investors. From January 2016 to January 2020 the number of Non-US securities on our market increased by 2,367 and monthly trading increased by ~95% to ~25 Billion per month. The pandemic and its impact on investors/investment (e.g. rise of retail), key regulatory changes (updated SEC Rule 15c2-11) and demographic shifts exacerbated this trend resulting in an additional 3,413 securities and ~10 Billion more traded per month in Q3 2022. Currently, there are 9,026 global securities with home country listings on 70 exchanges trading on OTC Markets. These securities represented 92% of September 2022 $ volume – 34.6 Billion.
Below we will delve into the data regarding global securities trading on our market and discuss some of the trends we see around data, disclosure, and delivery.
A Smaller World – A Bigger Pie
Global issuers and investors inherently understand that an increased pool of potential buyers (and sellers) can only add to valuations and liquidity. OTC Markets’ streamlined regulatory and disclosure framework has made it simple for global securities to become quoted and access the US investor base. Below is a list of top exchanges with securities cross-traded (either as F shares or G/ADRs) on OTC Markets and their respective activity:
September 2022 Data
|Exchange||# of Securities||$ Volume (Billions)|
|Tokyo Stock Exchange||1,126||5.93B|
|Hong Kong Stock Exchange||925||4.33B|
|Frankfurt Stock Exchange||259||4.15B|
|SIX Swiss Exchange||141||4.00B|
|London Stock Exchange||989||2.91B|
|Australian Securities Exchange||849||1.25B|
|Nasdaq OMX Stockholm||181||1.13B|
|Toronto Stock Exchange||674||.91B|
All of these issuers/securities are able to leverage OTC Markets’ distribution network to all the major US online brokers (Schwab, Fidelity, Robinhood, Etrade), US institutions and broker-dealers. It is effectively an IR program that seamlessly reaches every US investor with an online brokerage account.
It is important to note that access to the US is not a zero sum game for home country markets. US activity and investor interest often flows back to the home market exchange as they represent the largest pool of liquidity for these securities. In an Oxford Metrica study of foreign issuers who joined the OTCQX market, there is an observed increase in home country trading volume of 26% to go along with a 67% increase in OTC activity.
Alternative Data & Alternative Investments
Increased interest in global securities on our markets is also due to the changing demographics of investors and how they interact with markets and data.
Millennial and Gen Z investors who are very comfortable tracking down information and accessing data are aligned with our focus on transparency and have taken notice of the data we make available. On OTCMarkets.com, investors can access real-time Level 1 quotes for all our securities and real time Level 2 quotes for our OTCQX market securities (e.g. Roche ADR – RHHBY). We also provide alternative data points which highlight stock promotion, shell status and disclosure issues for securities on our markets. Younger investors and those who straddle the non-pro/pro divide see the value in this data and the transparency we are bringing to the market.
Non-US investors (retail and institutional) also find value in being able to track their investments in real-time during US trading hours. Over the past 3 years, non-US firms represent ~40% of new data feed subscribers and distributors of OTC Markets data.
Younger investors are also attracted to the alternative investment sectors, including crypto and cannabis, which have well known securities trading on our market. Mobile first investors now have access to more data, broader investment opportunities and in the US – little to no commission fees. The top ten most active securities on our markets in September shows the popularity of both global and alternative investments.
Top 10 Most Active September 2022
|Company Name||Symbol||Market||Country||Last Sale||
Sept $ Volume
|Tencent Holding Ltd.||TCEHY||PINK||China||$33.82||2008.6M|
|Roche Holding Ltd||RHHBY||OTCQX||Switzerland||$40.62||1664.2M|
|Grayscale Bitcoin Trust||GBTC||OTCQX||USA||$11.41||725.6M|
|Grayscale Ethereum Trust||ETHE||OTCQX||USA||$9.12||639.1M|
|Luckin Coffee Inc.||LKNCY||PINK||China||$16.50||521.9M|
|Nintendo Co., Ltd.||NTDOY||PINK||Japan||$50.97||353.0M|
|AIA Group, Ltd.||AAGIY||PINK||Hong Kong||$33.08||343.3M|
Macro global and economic circumstances have also provided a tailwind for global securities on our market. The political and economic volatility of the past few years has on a relative basis increased US influence in both areas. The political volatility of the war in Ukraine and the inflationary economic environment have investors looking to the US for leadership and to US denominated assets for safety. From a global (non-US) investor perspective, this elevates the need to monitor home country investments during US trading hours as decisions (Federal Reserve watch) and news out of the US can dramatically swing markets. For global issuers, the US economy and the US investor seems better positioned to weather the current storm and emerge poised for growth.
The long term trends of accessibility of data and investment options along with the decrease in trading costs will continue to drive US and global investor activity. These trends dove tail with our focus as a market – accessible, transparent and global; the next 15 years should be interesting.